Making Sense of Wild Supply Chains © Future of 2015

About Future Of Fish Purpose Future of Fish is a nonprofit that provides research, The Nature Conservancy commissioned this report to provide conservation practi- design, and business services to orga­nizations and tioners and artisanal managers with an overview of seafood supply chain entrepreneurs accelerating sustainability and trace- structures and how practitioners can harness the power of supply chains to ignite ability in seafood supply chains. www.futureoffish.org sustainable . The Conservancy uses this guide to inform and strengthen fisheries reform efforts and to capture lessons learned from its use with our partners and stakeholders.

Citation Future of Fish. Making Sense of Wild Seafood Supply Chains. A report created for The Nature Conservancy. 2015.

About The Nature Conservancy Special thanks to the following contributors from The Nature Conservancy’s The Nature Conservancy’s mission is to conserve the field teams: lands and on which all life depends; it works to Felicity Burrows, TNC Northern Program achieve this mission in more than 35 countries and all Matia Caillaux, Fisheries Specialist, TNC 50 states of the U. S. www.tnc.org Mariana Velez Laris, TNC Mesoamerican Barrier Program George Maina, Marine Project Coordinator, TNC Kenya Peter Mous, TNC Fisheries Conservation Program Carmen Revenga, Senior Scientist, TNC Global

Jeremy Rude, Fisheries Specialist, TNC Global Designed by Arno Ghelfi, Starno.com. Case study illustrations inspired by original illustration by Missy Chimovitz. Making Sense of Wild Seafood Supply Chains

A Primer for Resource Managers, Scientists, Fishers, and Other Industry Players Seeking to Harness the Power of Supply Chains to Ignite Sustainable Management in Artisanal Fisheries

Table of contents

An Introduction to Seafood Supply Chains ...... 4

The Structure of Seafood Supply Chains ...... 9

Supply Chain Challenges to Fisheries Management ...... 14

Case Studies ...... 19 Cover Photography: A from the Emerging Strategies for Progress ...... village of Malem gillnet 33 on the reef edge, Kosrae , Federated Conclusion ...... 36 States of Micronesia. © Nick Hall/TNC Glossary ...... 40 4 Making Sense of Wild Seafood Supply Chains

Frozen from Indonesian pole and line . © Jeremy Rude/TNC An Introduction to Seafood Supply Chains

A supply chain represents the process of getting a product from the producer to the consumer.

Though we call it a supply “chain,” there are few products in today’s global economy that move along a simple, linear track, from production to con- sumption. From clothing to cars to , modern supply chains resemble increasingly complex networks of people and companies worldwide that produce, transform, aggregate, separate, package, transport, store, , trade, sell, and serve goods. Global supply chains have become sufficiently complicated, such that there are advanced degrees in supply chain manage- ment. And few supply chains are more complex, convoluted, and cryptic than those involving seafood. This primer provides an overview of seafood supply chains with a focus on those that intersect with artisanal fisheries in emerging economies. Introduction Making Sense of Wild Seafood Supply Chains 5

On a global scale, the seafood industry handles approximately 158 million metric tons of product (over 91 million tons wild caught) every year.1 Tens of millions of people worldwide who fish for a living collectively harvest thou- sands of different ; they fish in every on the planet, and range from independent artisanal fishers in emerging economies to months-at- workers on factory trawlers. In addition to that diver- sity, certain product characteristics, as well as practices of supply chain actors, make seafood a wholly unique industry (see Table 1, page 7). First, fish are the world’s last major source of wild pro- tein. Nearly every other protein is farmed. Even within seafood, 50 percent of the global market is farm-raised. Because of ever-changing environmental and biological conditions, wild seafood supply chains face uncertainty and risk that other farm-raised- supply chains are able to avoid or mitigate. Second, fresh seafood is highly perishable. Without proper icing on boats and after landing, wild fish has a very short shelf life. Globally, 20 percent of seafood spoils before it reaches the consumer.2 Thus, at any given point in the supply chain the player holding the fresh inventory is in a particularly vulnerable position, racing against the clock to sell product before it expires. Knowing sellers are in that predicament can put a po- tential buyer in a position of power. This dynamic begins with fishers, who are often forced to accept whatever price is offered by their buyers—even if it’s a low bid—be- cause refusing to sell and holding out for a higher price could result in losing the sale altogether. Further along the supply chain, this imbalance can result in ultra-squeezed margins, and Fresh catch at Lima’s premier seafood market, can sometimes drive suppliers to resort to extreme measures—such as misla- Peru. beling product or purchasing illegal product—in order to stay solvent. © Jeremy Rude/TNC While fresh and live fish remain the dominant forms (46 percent) of seafood destined for the global edible seafood market, even seafood supply chains that handle processed products—frozen, canned, dried—must first ensure fresh product makes it from to the processing facility before it spoils. Frozen product is the most common form of processed seafood on a global scale, accounting for just over half of all processed fish for consump- tion, and is driven by demand in developed countries. Recent years have seen an increase in the consumption of frozen fish in emerging economies, 1. Food and Agriculture Organization (FAO), The but that growth rate has been hindered by a combination of traditional State of World Fisheries and , 2014, preferences for other forms of preserved seafood (e.g., cured, smoked, http://www.fao.org/fishery/ dried) and insufficient infrastructure. Lack of electricity, potable water, roads, sofia/en. ice plants, and refrigerated transport threaten larger-scale production and 2. FAO, “Global Food 3 Losses and Food Waste,” distribution of fresh or iced product. To build a robust cold chain capable 2011, http://www.fao.org/ of preserving and protecting seafood product requires significant invest- docrep/014/mb060e/ mb060e.pdf. ment where adequate facilities and infrastructure are not already in place.

3. FAO, World Fisheries As noted, this lack of storage can contribute to skewed power dynamics, and Aquaculture. especially disenfranchising the fisher. Yet, new cold-chain capabilities are not 6 Making Sense of Wild Seafood Supply Chains Introduction

always the best solution for the health of a fishery. Cold chains that help ex- pand market access may also have the negative impact of putting too much pressure on , as fishers can find buyers for more and more catch at ever-distant markets.

Third—and related to the point above—increasingly, the decision-making regarding use of fisheries takes place at distances far removed from the environment itself. This is especially the case in emerg- ing economies that sell access rights to foreign countries and in regions where foreign firms buy up local processing and distribution outlets—an increas- ing trend as seafood companies consolidate and vertically inte- grate worldwide. Both of these conditions increase the discon- nect between those making decisions about extraction from the fishery and the health of the fishery itself.

Fourth, unlike other complex supply chains (such as automo- Blue Swimming , bile manufacturing, in which lot-numbers can be permanently etched onto Indonesia. © Keith Flett/Future of Fish the parts themselves), individual seafood products—or even individual lots— can be difficult to track from the point of harvest through processing, distri- bution, and on to the end market. In most fisheries, there are transshipments at sea or aggregations on land, which comingle multiple species caught by multiple fishers across multiple days or weeks, and from multiple locations. Aggregation and comingling can occur further up the chain as well. With the exception of large, high-value species, it can be impractical and cost-prohib- itive to tag individual fish at the point of harvest. Thus, tracking the origins of seafood products and ensuring that information about the journey of the fish is maintained through each step in the chain requires seafood compa- nies to have sophisticated systems for traceability. Currently, this is sorely lacking on an industry-wide scale.

4. Felicity Lawrence, The combination of these factors—a wild resource, highly perishable prod- “Walmart, Tesco and ucts, paper-thin margins, and lack of end-to-end traceability—creates con- Costco among Retailers Responding to Revelations ditions whereby fraud, mislabeling, and sourcing illegal, unreported, and of Slavery in Supply Chains,” Guardian, unregulated (IUU) product can occur rather regularly, and often with impu- June 10, 2014, http:// www.theguardian.com/ nity. In some cases, those unlawful practices will be strategies for unscrupu- global-development/2014/ lous mid-chain companies to increase profits or to price their competitors jun/10/walmart-tesco- costco-retailers-respond- out of the market. As recent exposés have highlighted, lack of supply chain prawn-supply-slaves. This article is part of an transparency also enables egregious human rights violations (including hu- ongoing series that can be man trafficking and slavery) within the seafood supply chains of some of the accessed here or at http:// www.theguardian.com/ world’s leading retailers, including Costco, Walmart, and Tesco.4 world/slavery. Introduction Making Sense of Wild Seafood Supply Chains 7

Table 1. Key characteristics of wild seafood supply chains

Characteristic Consequences Unpredictable “We never know what’s going to be at the end of our hooks.” This fisher’s quote encapsulates the highly variable nature of fisheries, which in turn creates risk for the entire supply chain. Unlike farming or aquaculture, where can be managed and maximized, are at the mercy of constantly changing environmental and biological conditions. This unpredictability results in a fierce “daily catch” mentality that leaves little room for planning or business strategy. Given that fishers don’t necessarily know what they are going to catch and distributors do not always hold regular schedules— sometimes skipping over certain beaches or landing sites in favor of others—there can often be a mismatch at landing sites, especially in artisanal fisheries.

Highly perishable Fishers often have few options when it comes to finding buyers product for their catch, and rarely do any have the luxury of holding out for better prices, shopping around for a better offer, or storing their catch until market prices increase (as, for example, coffee farmers do). In seafood, such storage demands refrigeration capacity or transformation of the product into a preserved form—which requires getting the product to a processor before it spoils. Once sold into the chain, mid-chain players must work to rapidly move fresh inventory, which limits their bargaining power, or they must have capacity to preserve (freeze, cure, or can) acquired fresh product before it spoils. Post-harvest, over 20 percent of seafood worldwide goes to waste within the supply chain before it reaches the consumer. In emerging markets, post-catch waste is due largely to lack of infrastructure for refrigeration, storage, and transportation.

Low margins With the exception of a few high-end products, most seafood companies are working on paper-thin margins. This is a result of the race to sell, as well as the disconnect between the cost of fishing and the price of fish, with prices provided to fishers often not enough to cover their costs. Government subsidies that compensate fishers further contribute to overcapacity and masking the true cost of fishing from the consumer. These conditions force mid-chain players to focus on quantity, not quality, in order to survive.

5. Examples of direct tagging on fish include Disassembly and Most seafood is processed in a manner that makes it particularly ThisFish and Gulf Wild, aggregation challenging to tie product-origin data to a finished product. For which use small numbered example, some forms of processing, such as canning, involve the gill tags that are eventu- mixing of multiple fish that may have been caught in different regions ally (postprocessing) by different vessels on different days. Other processing methods associated with codes on involve partitioning a single fish into loins that are each sold to a packaging. different buyer and even processed in different ways, depending on 6. According to the World the quality of the fish. Bank’s Fish to 2030 report, ’s per capita seafood consumption has grown Minimal product Putting a serial number on a filet is difficult, expensive, and time- at an average of 6 percent tracking consuming. While advancements have been made in tagging per year since 1990. 5 Growth in aquaculture individual high-value fish, product tracking is usually done at a much has helped meet this larger scale (if at all), which creates opportunity for substitution, demand, but the influ- mislabeling, and lost information. ence of China’s market on the global seafood market will continue to be significant in the next Global market, Seafood (from wild and farmed sources) is the largest globally traded few decades. World Bank, global demand commodity by value in the world ($130 billion in 2013). Advances in Fish to 2030: Prospects freezer and transportation technology have enabled access to sea- for Fisheries and food from any region in the world, at any time of year. This availability Aquaculture, December (along with subsidies) has fueled growing demand for seafood on a 1, 2013, http://documents. global scale. In particular, growth of the middle and upper classes in worldbank.org/curated/ 6 en/2013/12/18882045/fish- China will continue to increase demand for seafood. 2030-prospects-fisheries- aquaculture. 8 Making Sense of Wild Seafood Supply Chains Introduction

Why Supply Chains Matter to Sustainable Fisheries Management With few exceptions, the current structure and accepted practices within seafood supply chains make it impossible to distinguish responsible, sus- tainably harvested products in the marketplace. As a result, consumers and other supply chain players are unable to reward those actors taking the steps (which often result in additional costs) to produce . But our global seafood supply chain doesn’t have to work this way. Engaging key actors and supporting shifts in business practices can be a powerful way to incentivize change— all the way down to the water. Supply chains can serve as a source of data capture to support better fisheries management models, and can be a means for rewarding fish- ers that fish more sustainably—via increased market access, higher prices,7 or stable partnerships, for instance. As much as they cur- rently contribute to the problem of and IUU, so too can the network of seafood supply chains around the globe become part of the solution. Measuring snapper in The following sections outline the basics regarding how seafood supply the processing plant, Indonesia. chains are structured and how they function. We explore key challenges that © Jeremy Rude/TNC prevent supply chain actors from engaging in practices that promote more sustainable fisheries, and provide real-world examples of how some of those challenges can be overcome. We conclude with key insights derived from experienced practitioners in the field, all of which can help guide resource managers looking to engage with supply chains as a mechanism for improv- ing local resource management. 7. It is important to note that higher price is often the most difficult benefit to achieve, as consumers are reluctant to pay more for fish, even if it is sustainably caught. Buyers and consumers, however, will often pay more for higher-quality fish, or for other desired attributes, such as local or fresh. So efforts to teach fishers how to improve handling techniques, plus better logistical management (refrigerated trucks, for example), can help improve margins for fishers by increasing quality. This is the theory of change behind efforts such as SmartFish, work- ing with fishers in the Gulf of . Making Sense of Wild Seafood Supply Chains 9

Yellowfin tuna is loaded at dockside and transported to a local plant for processing and export, Indonesia. © Jeremy Rude/TNC

The Structure of Seafood Supply Chains This primer focuses on commercial seafood supply chains that receive and move product from artisanal fisheries through domestic and international markets. While significant quanti- ties of seafood are also harvested recreationally or for the trade, those channels of production and distribution are outside the scope of this work. The Variable Middle Every wild seafood supply chain begins with a producer (the fisher) and terminates with an end buyer, who sells to a consumer. End buyers include retail outlets (from locally owned fish markets to national supermarket chains), restaurants, and foodservice establishments, such as hotels, hospi- tals, and schools. (See the Glossary, page 40, for more details on the various roles of supply chain actors.) In artisanal fisheries, it is not uncommon for fishers to bypass the supply chain completely and sell their catch directly to consumers on the beach or door-to-door within the community. However, for seafood sold into more formal markets, supply chains can consist of any number or combination of mid-chain players (e.g., aggregators, primary processors, traders, wholesalers, dealers, secondary processors, distributors, transporters), who transform, package, and move product from the point of production to the final sale. Generally speaking, the more mid-chain players present, the greater the com- plexity of the supply chain, the greater the risk of losing data and story, and the greater the possibility of fraud. However, shorter supply chains don’t necessar- ily equate with more trustworthy data. For instance, in a very short supply chain where one processor aggregates catch from dozens of fishers and then sells to two retailers, the process of tracing each product back to the source is impossi- ble without a system for segregating and labeling product from every producer. 10 Making Sense of Wild Seafood Supply Chains The Structure of Seafood Supply Chains

The following section identifies common supply chain attributes that are typically present within artisanal fisheries, and which relate to the ways product and product-level information flow, how mid-chain players function within certain seafood supply chains, and the motivations that drive certain practices. Identifying which attributes may be present in a supply chain can help hone strategies for how to effectively promote and incentivize more responsible fishing practices, better data capture and tracking, and better storytelling around product origin (see Table 2, pages 38-39).

ATTRIBUTE 1 Type of Product (commodity Vs Differentiated) The degree to which a product is differentiated within a supply chain is perhaps the most informative attribute for determining the potential to influ- ence that chain with respect to sustainability. At one end of the spectrum are commodities, which lack differentiation. Commodity These are high-volume products aggregated from many sources, and for chains are not which all the individual units—be they whole fish, filets, or value-added prod- structured ucts—are considered identical, regardless of how, where, when, or by whom to track they were produced or harvested. Purchasing decisions are driven first by information price, and then by decisions regarding quality, with little consideration about sustainability (though see noted exceptions below). Supply chains that about product handle commodity products typically move processed product that can be origin, nor do frozen and thawed and refrozen multiple times as it travels through multiple they recognize players operating in multiple countries. Increasingly, one step within these source supplies chains involves a routing through China, where processing (e.g., fisheries filleting, breading) often occurs before product is then re-exported. that adopt sustainable Commodity chains are not structured to track information about product management. origin, nor do they recognize source fisheries that adopt sustainable manage- ment regimes or practices. Instead, sustainable product sold into a commodi- ty chain is comingled with unsustainable product. Many high-volume fisheries feed into commodity supply chains, but some of the most common include , cod (and other types of whitefish), tuna, , and crab. With the growth of sustainable-seafood certification programs, however, some commodity-type products now have an element of differentiation. Such is the case with McDonald’s MSC-certified whitefish products. High volume and interchangeable, these supply chains segregate the product so that it can be traced back to specific certified fisheries. At the other end of the product spectrum are differentiated products, which are distinguishable from one another based on specific information, includ- ing harvest location, fishing method, fisher or fishing community, certifica- tion status, and brand. In general, purchasing decisions by supply chain actors are driven either by quality first and then price, or at least equally by these two features, as opposed to the clearly price-driven decision-making that occurs with commodity products. Across supply chains, there are several degrees of differentiation. These can The Structure of Seafood Supply Chains Making Sense of Wild Seafood Supply Chains 11

be based on (1) geography: aggregation of all product from multiple vessels in a single fishery; (2) product qualities: specifically graded products (size, quality, sustainability) from vessels in a fishery with or without origin data; (3) vessel: batches of product, such as from a single landing, net haul, or trap set; (4) individual fish: typically high-value species that may be individually tagged with unique codes, and include tuna, , salmon, and snapper. The supply chains that handle differentiated products need more sophis- ticated data management and traceability systems to track and verify the information associated with the unit of differentiation. Differentiated-product supply chains can serve local, regional, or export markets. In general, the fewer the steps between harvest and when the product is in its final form and labeled, the easier it is to keep the story paired with the fish. There are no set rules regarding whether a product qualifies as differenti- ated or commodity. For example, a vessel may unload a single catch that contains individual fish with different features. As opposed to sending the entire lot into a commodity channel, a middleman or processor may grade the product according to size, quality, or some other attribute for which the market is willing to pay a premium. Thus, the catch itself is coarsely differen- tiated, and then individual products may end up as commodities or differ- entiated products, depending on the market’s demand for distinguishing information. The process can become even more complicated when product It is possible from one fishery travels through multiple supply chains based on buyer de- to influence mand. In a lobster fishery, for example, MSC-certified product might wind up an entire as a premium good in a specialized grocery store, or can be sold as a com- supply chain modity through a supply chain that delivers product to a chain restaurant. In by working the latter case, what was once a differentiated product becomes mixed into a commodity chain, where distinguishing features are then lost. with a brand to incorporate ATTRIBUTE 2 sustainability Brand Presence criteria. Some supply chains are driven by brands that dictate product specifications and other protocols that producers, processors, distributors, and end buy- ers must follow. This influential brand can affect local, regional, national, or international supply chains. In most cases, the influence is top-down, com- ing from an end buyer (e.g., Whole ), a value-added processor (e.g., Wild Planet), a broker (e.g., CleanFish), or a certification standards setter (e.g., the MSC). In other instances a brand created by or in collaboration with fishers will create bottom-up influence over the supply chain, as is seen with some traceability companies (e.g., ThisFish), NGOs (e.g., Gulf Wild), or even fishing cooperatives (e.g., Alaska Gold). The specifications required by the brand may be based on location, quality, sustainability criteria, or other attributes that distinguish the brand in the marketplace. As such, it is of utmost importance to establish systems that ensure the branded product is differentiated from unbranded product. . Some mid-chain players may be involved with processing and distributing multiple types of branded and unbranded products, and it is not uncommon for brands to look to such players to serve multiple supply chain roles (e.g., processor/distributor). In some cases, brands will purchase fish directly from producers and perform the processing and packaging themselves in order to maintain close control 12 Making Sense of Wild Seafood Supply Chains The Structure of Seafood Supply Chains

and further protect brand integrity. Each player within the supply chain has a direct or indirect relationship with the brand and in some cases the brand is the exclusive market channel through which product from specific producers flows. Depending on the mission of the brand and ability to access key deci- sion makers, it is possible to influence an entire supply chain by working with a brand to incorporate sustainability criteria into their product specifications.

ATTRIBUTE 3 Relationship Dynamics Relationships within the seafood industry typically are long lasting and built on trust, especially relationships between fishers and their buyers (e.g., middlemen, first receivers). Within some artisanal fisheries, those relation- tend to be both business and personal in nature. For example, a middleman that buys from a fisher may also provide loans for fuel and ice, and may even have financed the boat. Often, the middleman is a member of the fisher’s family. While some fishers may feel comfortable with this type Supply chains of dependent relationship or may be fortunate to have a charitable buyer, containing others can become trapped by this arrangement. Even further up the supply such close chain, the power dynamics of the seller-buyer relationship can skew quite ties might easily, especially if the buyer begins to exploit the seller’s vulnerable posi- be among tion (holding spoiling inventory) or limited market access (see Attribute 5: the most Market access). However, to the extent that trading-partner relationships are flexible and healthy and the product can be differentiated to some degree, supply chains potentially containing such close ties might be among the most flexible and potentially open to open to implementing changes that could benefit the long-term sustainabil- ity of a fishery—both in terms of the resource and the people and businesses implementing involved. In situations where trading-partner relationships are weak or acri- changes that monious, the supply chain will be very difficult to influence directly. could benefit the long-term ATTRIBUTE 4 sustainability of a fishery. Supply Chain Consolidation (Vertically Integrated Vs. Dispersed) Many seafood supply chains are vertically integrated. All supply chain func- tions fall under single company ownership, with one actor controlling most major steps in the supply chain, from fishing activities until the product is sold to the end buyer, or even to the consumer. When necessary, additional product may also be sourced from independent fishers. Such vertical inte- gration provides a company with guaranteed access to product landed by its vessels, protects the company from ex-vessel price volatility, and allows for close quality and inventory control. Large corporations tend to exhibit this feature most, moving fresh and frozen products around the globe, al- though consolidation can be found in fisheries serving smaller local markets as well. For sustainably minded companies, vertical integration greatly ex- pedites the implementation of better management and fishing practices—all that is needed is a top-down directive. For companies motivated solely by profit or that do not recognize the importance of sustainable management, vertical integration can create a barrier to change. The Structure of Seafood Supply Chains Making Sense of Wild Seafood Supply Chains 13

On the other end of the spectrum are supply chains in which every function is performed by an independent entity, each working to make a profit. Short supply chains (two to three players) or those focused on differentiated or local product can work quite efficiently and may be effectively motivated around a common and mutually beneficial goal related to sustainability. However, for chains focused on commodity products or for those that are significantly longer (5-10 nodes, for example), that level of collaboration may prove more challenging. In general, as a supply chain lengthens, the margins shrink and players become incentivized to do whatever is necessary to cut costs (including, at times, committing fraud), as each player along the chain is always looking to pay the lowest price possible.

ATTRIBUTE 5 Market Access (Bottleneck Vs. Open Access) Many remote, artisanal fisheries involve a large number of fishers selling to a few middlemen who hold the supply-chain relationships. These middle- men create a bottleneck for fishers, restricting direct access to the market. The ability Depending on the type of product and location of the fishery, there may be a to influence series of middleman-aggregators that comingle product for a single proces- fisher sor or distributor serving a domestic or international market; or there may be behavior with a single middleman-processor-exporter that buys from all local fishers and is respect to the gateway for foreign companies to gain access to artisanal product. (Often sustainable the processors hold the export licenses.) The existence of such bottlenecks management limits the power fishers have to negotiate price. The ability to influence fisher hinges on behavior with respect to sustainable management hinges on being able to being able leverage the power held by the middleman, which requires convincing him to leverage or her that sustainable practices are aligned with business needs. In the case of fishery improvement projects (FIPs), that is often done in partnership with the power a major domestic or foreign buyer that can promise better market share or held by the premium prices in return for better management or fishing practices. middleman. Some fishers have more choice when it comes to where and to whom they sell their fish. They may be nearer to the end market, with options of bypass- ing the middleman and selling direct. Or they may have a highly demanded product, with multiple potential buyers bidding up the price. When it comes to influencing fishing practices toward sustainability, these fishers may be easily motivated, especially with the possibility of a new market channel. Summary of Major Attributes of Seafood Supply Chains Beyond simply describing the common characteristics that exist within seafood supply chains, these attributes also begin to highlight how engage- ments with supply chain actors may be struck in order to incentivize fisheries management–relevant changes. Understanding who holds the power, where sustainability has already taken root, and how relatively easy it might be to introduce new concepts or practices into the supply chain are all important considerations when looking for inroads to influence supply chains. 14 Making Sense of Wild Seafood Supply Chains

they do largely in response to the system in which they operate. Supply Chain Since 2008, the Future of Fish team has used a combination of Challenges ethnographic research (embed- ding researchers in a situation for field observation) and extensive to Fisheries interviews with supply chain play- ers to better understand practic- Management es and behaviors within seafood supply chains. That deep anthro- pological and design approach, The primary ways in which sea- supplemented with an additional food supply chains perpetuate seven interviews with fisheries poor fisheries management and conservation practitioners relate to lack of transparency, within the network of The Nature absence of traceability, and per- Conservancy (TNC), reveals a set verse incentives that encourage of core challenges within sea- unsustainable fishing practices. food supply chains that present However, it must be noted that major barriers to efforts promot- existing supply chain structures ing greater sustainability. As is were not necessarily intention- typical of complex problems, it ally designed; rather, they may is important to note that resolv- be legacy systems that evolved ing any of these issues on its over time with the intent to move own, while helpful, will not create highly perishable (and presumed sustainable fisheries on a global inexhaustible) product from scale. Instead, all these core chal- one region to another. While lenges must be addressed—pref- intentional fraud and nefarious erably through coordinated and practices certainly exist, seafood simultaneous efforts—in order to supply chain actors behave as shift the entire system. The Challenges Making Sense of Wild Seafood Supply Chains 15

What it is: Lack of paper or electronic further up the supply chain. The default records of where, when, how, by whom, for data sharing is that suppliers will pass and what was caught by each vessel for along only the information required or each trip. Ideally, this information would requested by their customers, or by gov- be recorded at the most granular level of ernment rules and regulations. Without Lack of fishing activity, such as by a series of traps clients demanding additional data on Vessel-level in one location or individual net hauls. catch origin, mid-chain players will not For small-scale fishers, and depending on spend their resources to capture or share Data Capture the method of harvest, data capture may those details—even when they have them. make the most sense at the end of a fish- In the event where they have the data, ing set, or at the landing site. confidentiality of fishing spots is also at play, although this tends to be more the Where it occurs: In many fisheries case in developed countries. around the world, fishers are not required to report their catch to the government Why it matters: Vessel-level data is the or to any supply chain entity. When they most relevant information for resource are required to do so, data are spotty, management and for determining the are incomplete, and can easily be lost, sustainability and legality of a product. as records are kept on paper. Fish are Fishery-dependent data is often the only also commonly mislabeled, or labeled available data for determining stock under a generic name (e.g., snapper or health, especially in countries where gov- reef fish). Records of transactions with ernment resources are too strapped to first receivers, if they exist, often do not run fishery-independent data collection. include relevant catch data, but rather In addition, all company branding and provide only a logbook of total weight, consumer-facing marketing initiatives that price, and a generic name, which in the claim to deliver sustainable seafood must tropics is often incorrect or is a common have access to vessel-level data (and name applicable to many species. Even verification of it) to ensure the business when information is recorded by the first is, in fact, supporting more responsible receiver, it is usually lost at some point practices on the water.

What it is: When a product or group Where it occurs: In some fisheries, early of products is processed prior to the product transformation tends to occur on first instance of data collection. This can deck aboard vessels as a way to consoli- include: date catch and reduce weight (when quo- Product • Grading of product to selectively tas are in place) or to hide illegal product deliver certain species or sizes to a (e.g., juveniles). Grading or shelling may Transformation processor. Recorded catch at this stage also take place dockside upon receipt Prior to Data does not account for the original catch by the first receiver before the product composition; is moved to a more formal processing Recording • Removal of flesh from the shell before facility where data are recorded more sizing or sex is determined; regularly. • Skinning and fileting a fish before spe- Why it matters: Transforming product, cies identification has occurred. when driven by the purest of intentions, 16 Making Sense of Wild Seafood Supply Chains The Challenges

is a logistics decision. For example, conch is determined by shell length and shell fishers do not want to take up space in lip thickness. Regardless of motive, early their small boats or in their coolers with product transformation can thwart sus- conch shells, so they remove the meat tainability efforts related to the harvest while still at sea and discard the shells of particular species, juveniles, or certain overboard. Without the shells, it is impos- sexes. sible to know the age of the conch—which

What it is: The mixing of product from and occur over several days. Likewise, different fishing events into a single most processing plants grade product volume. This makes it difficult, if not according to quality or size, regardless impossible, to accurately determine catch of when, where, or how it was caught. As Aggregation origin, catch method, date of harvest, size this sorting occurs, product from different composition, or any other data related to batches is mixed and moved along the of Supply the fishing activity. processing line en masse. Where it occurs: Aggregation tends Why it matters: Aggregation makes it to occur at the beginning of the supply impossible to differentiate responsibly chain—on the deck of the vessel, or at harvested product in the marketplace, the level of the first receiver. With limited as the critical information regarding the hold space, fishers often combine prod- catch is lost. Aggregation perpetuates uct from different fishing events, even “mystery fish”—as opposed to promoting if sets are separated by long distances “storied fish”—as the norm.

What it is: Complex, personal, and imbal- middlemen mean that some strategies anced relationships are common in the may be more appropriate than others. seafood supply chain. For example, one popular suggestion for incentivizing fishers to adopt more Where it occurs: Relationship dynamics sustainable practices involves securing occur throughout the supply chain, but Relationship direct market access to end buyers will- ones of particular interest are those be- ing to give fishers a price premium for Dynamics tween the producer and first receiver (a responsibly harvested product. In some middleman who often also serves as the circumstances, this approach may mean processor or wholesaler). skipping over an exploitative supplier that Why it matters: Determining an appro- had been undercutting fishers; in other priate intervention strategy for shifting cases, it may mean leapfrogging a fisher’s supply chains depends on understanding close relative, trusted friend, or communi- the human side of the supply chain equa- ty member—possibly even someone who tion. Knowing which actors hold power finances fishing activities or covers a fam- and the nature of those relationships is ily’s medical costs. Thus, understanding critical for determining whether and how the potential personal and interpersonal to broach an idea around sustainable ramifications of a particular intervention management with a community or com- or engagement is of utmost importance, pany. In many cases, the tight-knit and as leveraging supply chain relationships familial relationships between fishers and can be the determining factor for success. The Challenges Making Sense of Wild Seafood Supply Chains 17

What it is: Fishers are experts at fish- negotiations, logistics (e.g., transport, ing, but might not have the know-how or product handling), management and ad- experience necessary to engage more ministration (e.g., inventory management, productively (and sustainably) in the sea- purchase orders, invoices), and even food industry. community organizing (via co-ops, sec- Fishers tors, associations, or other structures). A Where it occurs: At the producer level of realistic strategy for sustainable manage- the supply chain. Typically ment must provide fishers with the neces- Are Not Why it matters: Many fishers are frus- sary business-related support services so trated by the fact that in order to suc- that they can focus instead on changing Businesspeople ceed as successful, sustainable fishers, their fishing practices (including new their time is spent doing everything but gear types, if necessary). Fishers that are fishing. Often, strategies to help fishers natural entrepreneurs and are interested get more value for their products require in doing more than just fishing should be skills in processing, marketing, price offered appropriate training.

What it is: These are the ingrained ex- Why it matters: Cultural norms can pectations, assumptions, and perceptions explain a lot about the root motivations or that shape everything from which species causes for certain behaviors. They are also are considered “favored” to the way fish- often the most difficult to shift, especially ers view their roles in the community. if they are tied to deeply held values. Cultural Understanding the beliefs and expecta- Where it occurs: Most frequently at the tions that directly influence fisher behavior Preferences two ends of the supply chain: producers is critical to crafting strategies that align— and consumers. and perhaps even leverage—those values, rather than fighting against them.

These final three challenges are not directly linked to the supply chain, but hold great influence over how effectively supply chain players can respond to sustain- ability initiatives.

What it is: A glaring hole in government of players making sacrifices to “do the responsiveness to actors in the supply right thing.” While it is impossible to root chain that are breaking the rules. out all “bad” behavior from a fishery even with the most sophisticated technology Why it matters: Some interventions re- Lack of quire regulatory changes (such as permits and well-funded government agency, Monitoring for exclusive access rights) that depend fishers and supply chain players need on proper enforcement for effectiveness. at least some level of assurance that the and A significant lack of enforcement—both government will support their efforts on the water and inside supply chain to make changes to comply with more Enforcement facilities—quickly erodes the confidence responsible fisheries management. 18 Making Sense of Wild Seafood Supply Chains The Challenges

What it is: Many emerging markets lack how to improve information for data- the institutional resources to support the poor regions focus on the capture of data collection, management, and analysis of while ignoring the need for back-end fisheries data. Even if it were collected, structures to support this effort. Database there is literally nowhere for this informa- management is a heavy lift, requiring Lack of tion to go. maintenance, storage capacity, and Database Why it matters: Whether industry-based, strategic development of access rights collected from fishers, or via independent and security. The latter especially requires and Data methods, efforts to improve data capture careful planning and dialogue with all Management will fail to improve fisheries if there is no stakeholders to ensure legality and effec- mechanism for storing, accessing, and tive use of the database for both industry Capacity analyzing. Currently, many initiatives on and fisheries benefits.

What it is: Although the challenges significant change. The challenges must just outlined were presented as distinct be addressed simultaneously, through obstacles, they are actually interrelated. multipronged approaches and with They create feedback loops that serve buy-in and participation from various Interrelatedness to perpetuate the status quo, failing to supply chain actors and other stakehold- reward fishers for responsible practices ers. However, just as the challenges are of Challenges and preventing the flow of information caused by supply chain characteristics required for storied fish to reach the and dynamics, the removal of the barriers market. may create an opening for supply chains Why it matters: Attempting to remove to act as drivers that incentivize sustain- just one barrier will likely not result in able management. Making Sense of Wild Seafood Supply Chains 19 Case Studies The following case studies provide examples of the diversity of sup- ply chains around the globe, as well as the myriad challenges em- bedded within them. Some of these fisheries also provide examples of emergent strategies for progress, which will be discussed in the following section. These real-world examples are from different re- gions dealing with different species and experiencing different mar- ket and regulatory conditions. They aim to provide both the breadth and depth of knowledge managers need when thinking through their own challenges and the potential solutions and opportunities that may be available to them.

Each case study provides: • Dominant supply chain attributes • An overview of the fishery • Product and data flows • Common challenges and where they occur in the supply chain • Examples of potential interventions based on the characteristics of the fishery and supply chain, and current stories of progress

BAHAMIAN VIETNAMESE BLUE CONCH FISHERY SWIMMING CRAB PAGE 27 PAGE 25

MEXICAN INDONESIAN LOBSTER FISHERY TUNA PAGE 20 PAGE 24 KENYAN MULTI-SPECIES REEF FISHERY PAGE 28 TIMOR SEA DEEPWATER PERUVIAN SNAPPER/ MULTI-SPECIES PAGE 21 FISHERY PAGE 30 20 Making Sense of Wild Seafood Supply Chains

CASE STUDY Mexican Lobster Fishery

Dominant supply chain and Banco Chinchorro. In Sian Ka’an, Points of information or attributes each fisher has their own desig- product exchange nated area within the co-op’s larger • Differentiated product flowing 1 Fishers, using simple “casitas” or Territorial Use Rights in Fisheries “lobster houses,” capture lob- into a commodity market (TURF), and only members of co-ops sters via lasso or net within their • Brand presence (MSC) are permitted to fish in those areas. own designated region within • Bottleneck preventing direct ac- The co-ops in Banco Chinchorro the co-op’s TURF. are in the process of replicating this cess to market 2 Co-op receives product at the management system. They fish by • Dispersed supply chain dock from the fisher and con- putting out lobster shelters and cap- ducts initial grading and pro- This 350 tons/yr fish- ture live lobster via small hand nets cessing (low-grade are ery in Quintana Roo is fished by 19 or lassos (snooks). The six co-ops tailed). fishing co-ops, six of which produce using these sustainable harvesting 3 approximately 60 percent of the methods are part of an MSC-certified Co-op sells the product to one of (estimated) five or six buyers catch. The six co-ops fish within two fishery, but have yet to receive certifi- who send freezer trucks to pick natural protected areas: Sian Ka’an cation for their chain of custody. up product from co-ops. 4 Delivery trucks drive product to Cancun, Quintana Roo, or MEXICO Merida, Yucatan. 5 Local tourist-oriented restaurants purchase product from buyers for local (domestic) markets, the majority of which remain in the CO-OP Mayan Rivera region. PROCESSOR 6 Product is also exported to China, Hong Kong, and US markets. BUYER BUYER BUYER BUYER BUYER BUYER

MAYAN RIVERA REGION

EXPORTER

USA

CHINA HONG KONG MEXICO RESTAURANTS/ DOMESTIC HOTELS MARKET

Supply Chain Challenges to Fisheries Management

Aggregation of Supply Fishermen are not businessmen

Learn more about the challenges on page 14 CASE STUDY Mexican Lobster Fishery (Cntd.) Making Sense of Wild Seafood Supply Chains 21

Data flow countries, fishers have found that their efforts to protect the resource 1 Co-ops record weight of catch and manage it responsibly are not (kg) per day in a paper-based being rewarded via higher prices registry. or increased market share. The 2 Monthly paper-based reports lack of chain-of-custody certifica- are sent from co-op to National tion makes it difficult for the fishers Commission of Aquaculture and to realize any benefits from their Fishing (CONAPESCA), includ- investment in achieving MSC certi- ing number of boats, fishing fication of the fishery. days, and total catch. From this information effort/boat can be Potential strategies for Lobster fisher with days catch, Mexico determined. progress © Erika Nortemann/TNC 3 Electronic records with relevant In collaboration with WWF, Mariana their cooperatives. Carefully structur- income for tax purposes are Velez Laris and her colleagues at ing deals with new buyers—poten- submitted to the government. TNC are actively exploring devel- tially by leapfrogging exploitative 4 Electronic invoices are ex- opment of a network of no-take middlemen and going straight to the changed with buyers along with fishing zones and new fisheries domestic end buyers—may be one electronic money transfers (no management systems to help con- avenue to pursue. SmartFish, a non- cash), except for a few very small serve the marine resources of the profit operating out of Baja, Mexico, buyers (local restaurants). Mesoamerican Barrier Reef. Fishers has trialed a similar tactic to increase in the sustainable-fishing lobster market access for fishers in this re- Challenges co-ops have a strong story to tell, if gion. Through improved handling of Fishers have restricted access to they can get that story to the market- product and direct sales, they have the market, with the regional buy- place. This requires business support managed to increase the price per ers—likely in collusion—controlling services that can help the co-ops pound of the landed catch, helping price points. With low-priced prod- explore marketing and price negoti- fishers to improve their livelihoods uct from competing Caribbean ation with buyers, using the power of without having to catch more fish.

CASE STUDY Timor Sea Deepwater Snapper/Grouper

Dominant supply chain not highly migratory fish, and sup- from other also fish in these port a fairly conscripted fishery in the waters when weather conditions attributes area of the Timor Sea south from the are good. Often, due to inclement • Differentiated market for high-val- of Timor, where the slope of the weather or poor fishing conditions, ue products, commodity market is very productive. the boats will harbor in Timor (on for low-value products Producers in this fishery come from the Indonesian side) until they either • Close-ties relationships Bali as well as surrounding islands. (a) decide it’s worth returning to the From Bali, midscale-size boats take fishing grounds to do more fishing, • Consolidated supply chain func- five to six days to reach the fishing (b) find another vessel going to Bali tions with relatively few players grounds and fish for a minimum of on which they can transport some or • Moderately open access to market four to five days before returning all of their catch, or (c) air-freight the Deepwater snapper and grouper are to Bali with the catch. Smaller boats catch back to Bali. 22 Making Sense of Wild Seafood Supply Chains Timor Sea Deepwater Snapper/Grouper (Cntd.) CASE STUDY

Points of information Timor Sea Deepwater Snapper/Grouper or product exchange 1 Producers: Fishers operating TIMOR SEA out of Bali fish in Timor Sea and return to Bali with the catch. 2 Landing: Small trucks transport fish to processing plant on Bali. 3 Timor traders: If the fishers BALI don’t land in Bali, the catch may be transferred TIMOR to a transport vessel or air cargo from Timor to the plant in Bali; catch may be pregraded before shipping. 4 Processor: Sorting, grading, processing, and fileting high- value fish for export. PROCESSING PLANT 5 Brokers: Companies that do not have facilities or export licenses make deals between fishers and exporters. 6 Cold storage: Boxes of fish LOCAL COLD are kept in cold storage. MARKET STORAGE 7 Exporter: Sends high-quality, BROKERS high-value fish to premium markets (roughly 30 percent of catch), including Hong Kong, China, and Singapore. Lower-quality fish goes to the EU and then US market, which is least willing to pay a high price premium for quality. 8 Local market: Low quality, or fish for which there is no

market outside Indonesia USA CHINA HONG KONG (roughly 70 percent of catch)

SINGAPORE

BALI

Supply Chain Challenges to Fisheries Management

Lack of vessel-level data Aggregation of Supply Lack of Database Management resources

Transformation of product prior to processing Fishermen are not businessmen

Learn more about the challenges on page 14 CASE STUDY Timor Sea Deepwater Snapper/Grouper (Cntd.) Making Sense of Wild Seafood Supply Chains 23

Data flow 1 Graders sort and grade fish by TIMOR SEA species and size, box them up, and move them to a weighing station that is linked to a data- base. Weight is recorded auto- matically, and fish is typed into the system.

BALI 2 Box gets a barcode that is linked Workers in processing plant sort, weight, and to information about what is in measure deepwater snapper and grouper, TIMOR the box. The seamless transfer Indonesia. of this information is based on © Jeremy Rude/TNC a new system piloted by TNC rules. As of August 2015, the TNC using technology by Insite Potential strategies for Indonesia Fisheries Conservation Solutions and in close collabora- progress Program is reaching out to various tion with a Bali-based processor. Peter Mous and his team at TNC Indonesia are working with one other companies in Kupang, , 3 Information is potentially up- seafood company and various small and Bali that are also sourcing from PROCESSING PLANT loaded to the ERP system of the traders to improve traceability of fish the same fishery. end buyer, but not necessarily. in the supply chain, for both busi- In addition, to help capture better ness and fisheries advancement. The estimates of direct take from the Challenges team created identification guides fishery, Mous is working closely with There are well over one hundred for the more than 120 species, and several of the Timor traders and LOCAL COLD different species that comprise the routinely trains personnel at the pro- MARKET STORAGE boat owners to share their data with catch of this fishery, making for dif- cessing plant in species identifica- government agencies and universi- BROKERS ficult fisheries management. Proper tion. Fish IDs are then assigned spe- ties that are involved in manage- identification of species at the point cific barcodes that can be scanned, ment. TNC facilitates this process, of processing is a major hurdle, as enabling the quality-control person- and TNC provides cash payment to nel and graders to attach the correct many plant workers are not experts those traders who agree to record name to each fish. That information observations in addition to the in snapper biology (at least three is transferred to a system that allows records they were already taking for to four species are referred to as for the identification of each batch business purposes. Furthermore, “red snapper”). There is also a high of graded species and the total the TNC Indonesia Fisheries turnover rate of processing plant weight of each batch to be captured Conservation Program identified a workers, so knowledge gained on automatically, and then attached to strong incentive among the vessel EUROPE the floor is often lost. In addition, the product as it is moved through owners: Their financial investments the multiple of fish com- the plant. The system is based on in operational costs for the fishers’ USA CHINA HONG KONG ing in from transshipments or air a smart weighing scale connected trips increased their desire to stay are often presorted by the fishers to a database, and it uses barcodes informed about where the fishers SINGAPORE or at an earlier port (e.g., Timor), a to track fish through the plant. By go. Using a low-cost tracking de- increasing accuracy, efficiency, and vice (Spot Trace) and smartphones, BALI process that selects out the favored traceability of the processing line, Mous has provided boat owners with species, sizes, and best-quality fish. the system brings business wins. By the technology they need to moni- This makes it impossible for scien- building trust and working closely tor their investments (and plan for tists to evaluate the health of the with this one company, Mous is now when fishers are nearing the landing stock, which depends on accurate building a database with informa- site) in exchange for them sharing estimates of how many individuals of tion collected by this system that will valuable data on fishing practices, different sizes and sex are taken from inform stock assessments and, even- harvest, and spatial information of the population at a given time tually, could inform harvest-control fishing grounds. 24 Making Sense of Wild Seafood Supply Chains

CASE STUDY Points of information or product exchange 1 Producers: Remote fishers bring Indonesian in tuna to a single landing loca- tion (each fishery to their own). 2 First receivers (middlemen): Tuna Purchase the catch dockside and divide product for local and Dominant supply chain fishing relatively sustainably com- export markets. pared to giant purse seiners that attributes 3 Enumeration: Happens dockside may be engaged in illegal fishing. • Differentiated product for some locations. Two artisanal vessel types fish via • Brand presence (Fair Trade, ThisFish) 4 Local processor: Product is handline around fish aggregating clear-smoked, flash-frozen, and • Close-ties relationships devices (FADs): Mandar vessels are vacuum-packed. • Dispersed supply chain functions 20-35 feet with three to five crew 5 Local distribution: Product Tuna is a valuable export for and fish relatively nearshore on two- moves to local Indonesian week-long trips; penongkol vessels Indonesia, but high demand for qual- vendors ity tuna from international markets will travel further to sea and target 6 Export: Product is shipped to is putting pressure on stocks. An the smaller-size tuna, staying out for Jakarta. opportunity exists to grow the market shorter trips, with longer turnaround for more artisanal fishers who are times between trips. 7 Jakarta processor: Frozen loins from the different local pro- cessing plants is trimmed and regraded, or cut up into a variety INDONESIA of products. 8 Export distribution: Product is packaged and shipped to Vietnam or straight to interna-

MIDDLEMEN tional markets. 9 Vietnam packaging plant: Frozen product is repacked and shipped for benefit of a “Made in Vietnam” label, which evident- ly gets better price.

LOCAL PROCESSOR

LOCAL PROCESSOR USA VENDORS

LOCAL EXPORT VIETNAM MARKET MARKET

JAKARTA

Supply Chain Challenges to Fisheries Management

Lack of vessel-level data Transformation of product prior to processing Aggregation of Supply Lack of Database Management resources

Learn more about the challenges on page 14 CASE STUDY Indonesian Tuna (Cntd.) Making Sense of Wild Seafood Supply Chains 25

Data flow 1 Producer: Paper receipt from the middleman. 2 Middleman: Keeps a written led- ger of purchased product (ves- sel, day, number of loins, weight) from fisher and sends the paper form to processor noting the transaction. 3 Enumeration: Paper-based dock- Processing of for export markets, side data collection is entered Indonesia. into an Excel sheet and up- © Jeremy Rude/TNC loaded to iFish and government trucks and container ships need to enable traceability and storytell- database. to be filled. In addition, process- ing for premium markets. ThisFish 4 Local processor: Paper trail fol- ing plants lack Wi-Fi and all data is requires processors to upload lows product. hand-written and paper-based (no catch data—including details on the scanning). Challenges location, catch method, and even the captain of the vessel—into a Both boat types—but especially Potential strategies for database. That information is then Mandar—may fish multiple FADs in attached to the product package a single trip and currently have no progress by QR code, which consumers can mechanism for separating catch Fair Trade certification is already from different fishing sessions (or in place in one locale to differenti- scan with their smartphones to learn even days) apart. In addition to this ate this artisan-caught product for about the fish. Both Fair Trade and aggregation, suppliers aggregate high-end markets willing to pay a ThisFish efforts are examples of product from multiple fishers in premium. In a similar approach to supply chains with a brand-driven at- multiple villages in order to maintain expand reach to markets willing to tribute, and represent an example by consistent supply; processors aggre- pay for verified sustainable product, which supply chains can be shifted gate their product to make transpor- the company ThisFish is working (or an alternative pathway built) to tation cost effective, as refrigerated with MDPI, a local Indonesian NGO, effect change in the system.

CASE STUDY Vietnamese Blue Swimming Crab

Dominant supply chain demand from the US foodservice in- residents. A fishery improvement attributes dustry, mainly for crab cakes. Fishing project (FIP) established a number of • Commodity product activities tend to occur in remote years ago to eliminate the harvest of regions of Vietnam on a combina- egg-bearing females and juveniles has • Brand presence (FIP) tion of large boats, small trap boats, been largely unsuccessful; currently, • Dispersed supply chain functions small-scale gillnetters, and foreign several US-based buyers and supply Vietnamese blue swimming crab is a trap boats and trawlers. The fishery chain participants are looking for a highly overfished fishery with huge provides critical livelihood for local new FIP model to restore the fishery. 26 Making Sense of Wild Seafood Supply Chains Vietnamese Blue Swimming Crab (Cntd.) CASE STUDY

Points of information or 2 Paper records from picking and within the supply chain are com- product exchange grading stage are passed to FIP. monly informal, with no records 3 produced. 1 Producers: Fishers bring prod- Information is captured via pur- uct to the landing site. In some chase orders, invoices, or inter- regions, fishers may deliver nal enterprise resource planning Potential strategies for product to a “collector” boat. (ERP). progress 4 2 Primary processing: Cooking Some suppliers have a cloud- Efforts are under way to introduce and grading often happen on based traceability technology both paper-based and smart the beach. Picking may be an ex- system that communicates infor- technology (e.g., smartphones, tra step or lumped into cooking/ mation to the end buyer. tablets) at the point of landing in grading. Challenges order to increase data capture. 3 Secondary processing: Smart technology could aid in pro- Currently, the biggest challenge to Pasteurization, packaging. viding a way to measure and weigh sustainable fishing in this fishery is landed crab quickly and accurately 4 Distribution: Cooked crab is sent that compensation is on a per-unit while generating real-time data on in large vats to local and export basis, so there is no incentive to markets. discriminate between harvesting the size of the individual crab. This 5 End buyer: Usually foodservice juveniles and adults—both garner solution is similar to the pilot imple- industry in the US. the same price. In addition, once the mented by TNC in the Indonesian crabmeat is picked, it is very difficult deepwater snapper fishery. The Data flow (though not impossible) to discern challenge here, however, is that 1 No data is generated at the vessel what size the original crab was, mak- much of the primary processing is level (but efforts to create paper- ing enforcement of the size regula- done right on the beach, as op- based system are under way). tions difficult. Finally, transactions posed to within a facility.

VIETNAM Vietnamese Blue Swimming Crab

PRIMARY PROCESSING

SECONDARY PROCESSING

USA COLLECTOR

VIETNAM

LOCAL MARKET

Supply Chain Challenges to Fisheries Management

Lack of vessel-level data Transformation of product prior to processing Aggregation of Supply Lack of Monitoring and Enforcement

Learn more about the challenges on page 14 Making Sense of Wild Seafood Supply Chains 27

CASE STUDY Bahamian Conch Fishery

Dominant supply chain Bahamas and is strictly governed by is significant, with an estimated 40 to attributes CITES (Convention on International 50 percent of Bahamians consuming Trade in of Wild conch every day. Over 60 percent of • Commodity product Fauna and Flora) under Appendix II the total harvest is landed when the • Close-ties relationships (regulated trade based on permits lobster is closed, and fish- ers turn to conch as an alternative • Consolidated supply chain func- certifying legal catch). The CITES income source. tions (few nodes) status imposes a cap for the export • Open access to market through market at approximately 500,000 Current conch fishery regulations multiple buyers lbs of conch meat per year (about limit fishers to only harvesting adult Queen conch (Lobatus gigas) is 31 percent of the total fishery), but conch, which are distinguished by the second leading seafood export places no limit on harvest for the do- shells with flared lips. However, most fishers process the conch onboard product (behind spiny lobster) of the mestic market. This domestic market the vessel, removing the meat and discarding the shell in order to save BAHAMAS room in their coolers and reduce weight on the boat. Thus, what is landed is the meat, from which it is nearly impossible to gauge informa- tion about conch age.

Points of information or

PROCESSORS product exchange 1 Fisher catches conch and re- moves shell on boat. 2 Fisher sells conch direct to local market (restaurants, retail, traders, dockside to LOCAL MARKET RESTAURANTS locals). 3 Fisher sells conch to proces- sor/exporter (about nine major exporters that split CITES quota). 4 Processor cleans, grades, and packages product. USA 5 Product is shipped to US market (approximately 500,000 lbs/yr worth $3.3 million).8

8. L. G. Gittens and M. T. Braynen, “Bahamas National Report: CFMC/OPESCA/WECAFC/CRFM Working Group on Queen Conch,” Department of Marine Resources, 2012, http://www.strom- busgigas.com/Meeting%20Panama/Queen%20 Conch%20Meeting%20(23%20October)/Bahamas/ Supply Chain Challenges to Fisheries Management Bahamas%20national%20report.pdf.

Lack of vessel-level data Transformation of product prior to processing Aggregation of Supply

Learn more about the challenges on page 14 28 Making Sense of Wild Seafood Supply Chains Bahamian Conch Fishery (Cntd.) CASE STUDY

Data flow based on landing locations limit this resolution). In addition, conch 1 Spot checks by landings col- landed without the shell cannot eas- lection officers who conduct ily be checked for compliance with interviews and inspect catches the flare-lip requirement. (coverage is very limited). 2 Processors submit purchase re- Potential strategies for ports to government and include data on aggregate landings such progress as weight, region, and fishing Felicity Burrows and TNC’s Northern effort. Caribbean Program actively works to develop solutions that can improve Queen conch in its natural , Banamas. Challenges sustainable management of com- © Jeff Yonover/TNC The lack of any data reporting mercially valuable fisheries, includ- system for direct sales into the vast ing lobster and conch. With recent A similar effort could be initiated for domestic market presents a huge progress gained in the lobster conch. In addition, to help develop problem for fisheries managers. industry, there may be opportunity more accurate data for the domestic Though processors provide pur- to leverage the efforts already spent conch market, there may be oppor- chase records, the majority of conch in developing a FIP and education tunities for smart technology. Similar sold in the Bahamas goes through campaigns for curtailing the take of to the challenge in the Vietnamese the undocumented local supply undersize lobster to help the conch crab industry, smart weighing or chain, with fishers selling directly to industry. The “size matters” educa- sizing scales could aid in develop- consumers or to retail and restaurant tion campaign implemented by ing alternative models for estimating outlets. Spot checks by local govern- Friends of the Environment calls at- conch maturity based only on the ment officials are scarce and cannot tention to the illegal take of juvenile meat; this would allow for enforce- determine detailed harvest loca- lobster, requesting retailers and ment officers to better determine tion information (estimates on the restaurants (as well as fishers) to stop legality of catch and for scientists to potential range of fishing grounds buying and selling undersize lobster. adjust fisheries models.

CASE STUDY Kenyan Multispecies Reef Fishery

Dominant supply chain demersal finfish, , , In 2007, the Kenyan government attributes crab, and lobster. These products are recognized the need for local com- sold through multiple seafood sup- munities to help co-manage marine • Some differentiated product, ply chains into local, regional, and resources. Local Beach Management mostly commodity international markets, with fishers Units (BMUs) were formed to man- • Close-ties relationships selling to different buyers depend- age approximately 20-km stretches • Dispersed supply chain functions ing on their catch each day—and on of coast and the resources offshore. • Bottleneck hindering market whether buyers are present at the The BMUs consist of stakeholders access remote landing sites. (fishers, processors, dealers, and The reef fishery of Pate Island, off Fishers use traditional artisanal gear other beach workers dependent on the northern coast of Kenya, is a (traps, handlines) out of nonmotor- fisheries) from each community, and tropical multispecies artisanal fishery ized canoes, leaving in the morning part of their mandate is to capture that brings in dozens of pelagic and and coming back in the evening. and record fisheries data. CASE STUDY Kenyan Multi-Species Reef Fishery (Cntd.) Making Sense of Wild Seafood Supply Chains 29

Points of information or High-value catch: Sea cucumbers, Low-value catch lobsters, , and select high-end product exchange  Fisher lands catch at the beach finfish This fishery has several distinct Fisher sells catch: supply chains, depending on the 1 Fisher lands catch at the beach.  Door-to-door in the neighbor- species. 2 Fisher sells to a buyer (dealer) hood using a bicycle or on foot who transports catch (by sea and public bus) to locations farther  To a local market woman, who up the coast (300 km). then sells fresh or cooked/dried product at the local market 3 Buyer/dealer then sells directly to hotels and restaurants or, if  To a local buyer/dealer who pre- the buyer is an agent of export, pares the product (dried, salted, brings catch to a processing or smoked—usually and plant. rays) and sells the processed product to another dealer who 4 Processing plant then exports will distribute to coastal towns to China, the Middle East (UAE), (not mainland) Dubai, Hong Kong, and Spain/ Italy (especially lobster and  To a large-scale buyer/dealer crab).  Large dealer arrives with truck that can hold 3–5 tons of fish and parks at landing site, staying two to three days until truck is loaded. Product is KENYA fresh on ice, chilled, or frozen within trucks.  Dealers sell to retail outlets in towns up the coast, or to the FISHER $ $$$ export market.

LOW-VALUE CATCH HIGH-VALUE CATCH

LOCAL LARGE-SCALE MARKET BUYER/DEALER BUYER

LOCAL BUYER RESTAURANTS/ GROCERY HOTELS STORE

ITALY USA SPAIN CHINA RESTAURANTS PROCESSING PLANT UAE/DUBAI HONG KONG

KENYA

Supply Chain Challenges to Fisheries Management

Lack of vessel-level data Relationship Dynamics Aggregation of Supply

Learn more about the challenges on page 14

$$$ 30 Making Sense of Wild Seafood Supply Chains Kenyan Multi-Species Reef Fishery (Cntd.) CASE STUDY

Data flow choice but to accept. Farther inland, Potential strategies for in the capital city of Nairobi, con- 1 Upon landing, fishers record progress sumers are willing to pay a premium catch with the local BMU. The TNC Kenya team, led by George for local reef fish, but there are 2 Fisheries officers check the Maina, has launched a fish-to-market currently no direct channels through records of local BMUs to ensure project that aims to tackle the eco- data collection and government which fishers might access that nomic issues of the fishery in order reporting are taking place. market; most are unaware that such to address the ecological ones. Right demand exists. 3 No data accompanies product now, fishers cannot afford to reduce when fishers sell to small or local The variability of the fishery and the their landings or absorb reductions dealers. remoteness of landing sites make in catch that marine protected areas 4 For large buyers in the export it difficult for fishers and dealers to (MPAs) would force. By starting with a value chain analysis, Maina and market, records are kept as man- align supply and demand. Some his team have identified the Nairobi dated by the government for days when there are no dealers market as a key opportunity that, if trade purposes. nearby, fishers simply will not go it can be tapped, would provide in- 5 The Revenue Department also fishing. Other days, fishers might creased economic stability for fishers keeps records of export prod- land huge volumes and only one or via higher prices and greater market ucts, but the records are not two dealers will be present, offer- easily accessed or analyzed. access. To make that happen, TNC is ing low prices, while other dealers drafting a business plan for mul- Challenges up the coast might be struggling to tiple BMUs in the region to address fulfill orders and would be willing to For high-value species (mostly the business needs—logistics of pay much more. Unfortunately, there lobster, , crab, and a processing, storage, branding, and few select finfish), there is competi- is no way for dealers and fishers to marketing—that all must be in place tion among dealers, which results in communicate about excess sup- for fishers to be able to access and better prices for fishers. However, for ply or unfilled demand. There are take advantage of this new market. the vast majority of species caught, also challenges with foreign vessels TNC is also exploring how private the buyers hold the power, offering bringing in catch and flooding local investment might fund some of this very low prices that fishers have no markets, driving down prices. development work.

CASE STUDY Peruvian Multispecies Fishery morwong. These activities are mainly Dominant supply chain Province, Peru is an iconic fishing oriented to local markets and, de- attributes community and popular tourist destination. The multispecies fishery pending on the species, may be con- • Commodity (high-value and in the area is the target of artisanal sidered midvalue (crab and snail) or low-value) fishers and divers who operate near high-value (octopus, loco, silverside) • Brand presence (co-op) for benthic resources, such as products. Rock snail, however, is • Close-ties relationships black rock snails, octopus, crab, loco what sustains the dive fishery, as it is (a type of ), razor clam, and harvested year-round. The main fish- • Dispersed supply chain functions species such as silver- ing grounds is in a multiuse marine • Open access to markets side and demersal species related to protected area (MPA) that still lacks Ancón, a district of northern Lima hardrock substrate, such as Peruvian a management plan. TNC has set CASE STUDY Peruvian Multispecies Fishery (Cntd.) Making Sense of Wild Seafood Supply Chains 31 up a pilot with divers and fishers to based on the price set by the (e.g., setting up a stand, or sell- manage the fishery in a responsible producer. ing out of a truck), or will sell to a way, using science to support their 4 In rare cases, a minorista (minor mayorista (major seller). internal agreements about when to commercial seller who sells to 9 For local markets, the may- fish, where to fish, how much to fish, restaurants and hotels) will buy orista will sell to minoristas, or and size restrictions. directly from the halador at the sometimes directly to major port. hotels, restaurant chains, or Points of information or 5 The first buyer purchases the supermarkets. product exchange catch from the halador and usu-  Minoristas then sell to hotels and 1 Divers (two per boat) harvest fish ally does some primary process- restaurants. The highest-value and shellfish. Tripulantes (crew) ing in the landing facility at the product goes to Lima. are other fishers on board who port.  For export markets, the mayoris- help the divers with air hoses and 6 A first seller then buys processed tas will aggregate catch from with navigating the boat. Other product from the first buyer as several first sellers until they fishers use hook and line or gill- well as from other primary pro- reach a critical volume—usually nets to fish for pelagic species. cessors, aggregating catch from more than 5 tons—at which point 2 Once in port, a halador (puller) multiple boats and, possibly, they can sell to a secondary is paid a small sum of money multiple ports. processor. to help the producer (fisher or 7 The first seller then transports  The secondary processor will diver) move the catch from the the product to the main fishing package, freeze, and then sell boat to the selling area at the terminal—the big local market for through a broker or directly to port. fish in Peru. a buyer in another country. The 3 The halador connects with the 8 The first seller will either sell the main export markets are the US, first buyer and facilitates the sale product directly at the market the EU, and China.

PERU

FIRST SELLER

FIRST FIRST SELLER BUYER STAND

HALADOR MINORISTA MAYORISTA EUROPE USA CHINA

RESTAURANTS/ SECONDARY HOTELS PROCESSOR PERU

Supply Chain Challenges to Fisheries Management

Lack of vessel-level data Relationship Dynamics Aggregation of Supply Cultural preferences

Learn more about the challenges on page 14 32 Making Sense of Wild Seafood Supply Chains Peruvian Multispecies Fishery (Cntd.) CASE STUDY

Data flow 1 TNC has helped set up landings records for some species. 2 Biological data—including maturity, size and CPUE (catch- per-unit effort)—are due to be recorded by late 2015. Challenges There is a lot of informality in the artisanal sector, and there are no government regulations. Thus, little is known about the volume or char- acteristics of the species targeted, as there are no enumerators or surveil- lance at all the landing facilities to determine who is offloading and what they have caught. In addition, the Peruvian government tends to be leery of any types of exclusions (e.g., use rights, territorial rights, catch shares) that may increase the risk of social conflict. In long supply chains, it may be tempting to suggest that produc- A fisher’s catch of the day on sale dockside, Peru. ers could get paid higher prices by © Jeremy Rude/TNC cutting out some of the middlemen. However, it is important to under- regulating fishing activities in the as the community is well known in stand who those middlemen are, area have yet to design a manage- Peru as a historical fishing port and and what other roles they might play ment plan; nor has the Port Authority recreational beach. They are also in producers’ lives. For example, in (Capitania de Puerto)—in charge of proud of what they are doing in Ancón the haladors and first buy- enforcing marine activities, includ- terms of managing the fishery more ers are usually related to divers and ing illegal fishing—designed one. responsibly, which could add extra fishers, or may be compadres—non- Eventually, regulations will need to value to the name. There are restau- biological family. Oftentimes the first be established. A pilot with arti- rants in Lima interested in highlight- buyer is a godmother (women hold sanal fishers operating in the MPA ing seafood from Ancón, and some very strong positions in the value is currently underway within TNC’s are doing so already (even if the chain). If someone in the producer’s Project and could product isn’t from Ancón). family is sick, they go to the first serve as a model for how communi- buyer to get medicine. For some in The fact that women have very ty-led management can be success- the fishery (mainly gillnet fishers), the strong roles in the Peruvian seafood ful in Peru, providing a starting point first buyer is also the one financing value chain should be considered for the types of data that can be the fishing activities. further, specifically with respect to gathered from fishers both to verify their receptivity to ideas around the effectiveness of the management Potential strategies for sustainability, resource stewardship, plan and to tell the story of seafood progress and preservation for future genera- origins in local and export markets. Although the MPA was approved tions. Depending on the dynamics of five years ago, the Ministry of As noted by TNC Fisheries Specialist the relationships, women may have Production (PRODUCE) and the Park Matias Caillaux, the fishers in Ancón latent influence on fishers’ practices Service (SERNANP) responsible for want to create some local branding, that has yet to be explored. Making Sense of Wild Seafood Supply Chains 33

Anchored boats in the Bay of Ancon, Peru. © Jeremy Rude/TNC

Emerging Strategies for Progress Just as there are some common supply chain challenges that impede sustainable fisheries, so too are there some common ideas and innovations that may help to address those chal- lenges. This list of emerging strategies is not comprehensive, but rather is intended to inspire further thought, discussion, and engagement among practitioners in the field. It is an invita- tion for the resource-management community to help refine and add to these concepts as new pilots are launched, lessons are learned, and new innovations are developed and tested.

Identify Who Holds the Power As is the case with any group of people, in many supply chains, specific players hold disproportionate influence over others. Identifying who those individuals are—and how they could benefit from a conservation-aligned ini- tiative—might be a powerful approach for initiating a shift toward responsible practices. For example, in some fisheries, suppliers are far more than just fish dealers—they provide financing for boats, fuel, and ice; they support fishers by paying for healthcare costs and other unexpected expenses when they arise. Getting buy-in from suppliers around sustainable-fisheries initiatives has helped convince fishers to participate, and has built support for several such efforts around the world.

Prove the Concept Industry players are understandably hesitant when it comes to collecting and sharing data. One way to gain trust is to start small, and to prove the value of participation by focusing on one player who can serve as a model for others. Peter Mous with TNC Indonesia did this when he teamed up with a single processor in Bali. Working closely with this forward-thinking busi- ness leader, his teams have installed technology and new processes on the 34 Making Sense of Wild Seafood Supply Chains Strategies for Progress

plant floor, which has increased efficiency and traceability and helped the company improve its branding. At the same time, through careful planning, they have built a data-sharing system that provides TNC with near-real-time catch information based on what is moving through the plant—a huge step toward building appropriate fisheries management for this valuable fishery.

Align with Existing Cultural Values To say that every supply chain is different appears obvious, but it is critical to explicitly acknowledge the differences that may exist between a fishing com- munity in one region and another just up the coast. In comparing Chilean and Peruvian fisheries, major differences in the way fishers view themselves and their work means that some of the strategies that have worked in are not practical for Peru. Instead, TNC’s Matias Caillaux, in working closely with fishers in the Ancón region, has identified deep local pride as an impor- tant value that could serve to unite fishers around a branding campaign.

Provide Evidence of Progress Fishers want to see the results of conservation efforts and often cannot af- ford to wait for long-term responses. Providing support for transi- One way to tions and proof that efforts are, in fact, working, is an important element for gain trust is participant retention and program success. Focusing on changes in fast- to start small, response components of the ecosystem is one way to do this. The nonprofit and to prove Blue Ventures used this approach in encouraging a fishing community off the value of Madagascar to leave a small no-take zone just for octopus. Fast-growing and participation rapidly reproducing, the octopus population required only five months to by focusing show significant returns. Seeing the evidence-based benefits, other commu- on one player nities quickly followed suit. who can serve as a model for Enable Well-designed Alternative Livelihoods others. In a different approach, Wayan Patut has used farming and ecotour- ism as a way to grow the economy and income for fishers and to reduce destructive fishing practices. Small coral pieces can be sold to the aquarium trade after short time periods, helping generate income for the cooperative as well as provide starters to restore the local reef. Ecotourism brings div- ers and snorkelers to view the farms and reefs, further diversifying income. These revenue streams and more consistent supply for aquarium dealers have made it possible for fishers to make a better living, which frees them from the pressure to catch aquarium fish with destructive techniques, and allows them to focus on fishing sustainably. A word of caution here, though: the strategy for developing alternative livelihoods must be thought through thoroughly and designed in close partnership with communities to avoid unexpected shifts in effort or prac- tice that can to more harm. For example, to reduce fishing effort, the government of the Pacific Island nation of Kiribati subsidized the coconut-

oil industry to lure more fishers off the water. The plan worked, and then 9. Richard Harris, “Reef backfired. Former fishers made more money picking coconuts, and because Conservation Strategy Backfires,” National of this, they didn’t have to work as much. In their newfound leisure time, they Public Radio, November 18, 2009, http://www.npr. went fishing. Fishing actually increased 33 percent, while reef fish popula- org/templates/story/story. tions plummeted.9 Approaching innovation with a human-centered design php?storyId=120536304. Strategies for Progress Making Sense of Wild Seafood Supply Chains 35

approach or an anthropological lens helps to identify individuals’ motiva- tions and values from the start. These can then be leveraged to construct ap- propriate, long-lasting initiatives with outcomes in alignment with improved livelihoods and ecosystem health.

Team Up There are many types of partnership structures that can help fishers and sup- ply chain players organize to create positive outcomes for their businesses and the resource. In Chile and Mexico, cooperatives have worked to orga- nize fishers and provide exclusive access to specific fishing areas (TURFs) that they can then manage for maximum returns and long-term sustainabil- ity. In Kenya, the BMU model brings in upstream supply chain players to be part of the resource management unit. In the Bahamas, the Bahamas Marine Exporters Association realized that as major beneficiaries of improved lob- ster harvests, they needed to invest in supporting the FIP efforts. By joining together, they helped create the database management system now used by the government and industry to monitor catch and export of lobster, as well as supporting several other projects within the FIP, including education and outreach campaigns. Capitalizing Brand the Local Product on a region’s There is a growing trend—from huge commercial fisheries in Alaska to small positive bays in Peru—to harness the power of a good reputation to create regional reputation brands. For many fisheries, eco-certification is cost prohibitive; however, may be one regional markets may be willing to pay for product that comes from areas way to open that are considered “pure,” “natural,” “well managed,” or historic hearts of more lucrative fisheries. Capitalizing on a region’s positive reputation may be one way market to open more lucrative market channels for fishers. New technology and channels for forward-thinking seafood companies have opened the door for streamlining fishers. the process by which the story of the region and fish can make it to market. A few traceability companies, such as ThisFish, are working with fishers and supply chains to track legal, sustainable product and provide the consumer with access to that story through QR codes on packages. Technology, orga- nization, and creativity are making local branding feasible and affordable for seafood supply chains around the globe.

Let Fishers and Industry Lead Successful engagement with seafood supply chains must prioritize listen- ing and facilitating over dictating and controlling. Understanding deeply the structure, function, culture, and needs of the players involved is the first step toward developing a range of potential interventions and solutions—all of which must be brainstormed and codeveloped with the players them- selves. Resource managers must strike the delicate balance of serving as advisor—providing options and evidence that can be used to assess or refine an initiative—while also helping stakeholders take ownership of their ideas. Creating this kind of supportive structure will go a long way in empowering the critical players to take responsibility for their behavior change and to promote the program to their peers, building long-lasting engagement. 36 Making Sense of Wild Seafood Supply Chains Conclusion The general overview and case studies presented here provide a glimpse into how supply chain structures and functions can create challenges (and offer opportunities) for resource management and sustainability efforts with- in fisheries—particularly for artisanal fisheries in emerging economies. As with any complex system, driving positive change within a seafood supply chain requires a deep understanding of the human and logistical factors that are creating barriers, and designing solutions that can work in concert with one another over time to shift behavioral habits. There are no silver bullets, no domino effects. Instead, multiple challenges must be simultaneously tack- led in order to loosen and free up the entire tangled web. That is easier said than done, but not impossible. The emerging strategies for progress, based on preliminary successes within actual fisheries, offer some starting points for exploration. In addition, we list below several key insights from field experts, along with some guiding questions, that may help practitioners design and execute effective engagements that harness the power of supply chains to build more sustainable fisheries. Key Insights

Data collection: Start with the resource, then follow it up the supply chain Given the fractured and convoluted nature of seafood supply chains, it is nearly impossible to gauge what is happening in a data-deficient fishery by attempting to trace product back from the end buyer to the resource. Instead, by starting with fishers, understanding who participates in the fishery, and learning the locations of fishing grounds and landings sites, it is possible to begin building knowledge of where opportunities lie for captur- ing, storing, and sharing data—perhaps with fishers, perhaps with first receiv- ers, perhaps even further up the chain.

Behavioral change: Think beyond monetary incentives There is a tendency to default to financial rewards when thinking about how to incentivize behavior change within seafood supply chains. But through careful observation, interviews, and embedding with participants of a fishery, it is pos- sible to unearth motivations at each step in the supply chain that go beyond money. Such an effort demands insight and creativity, but with the right ap- proach, those motivations may then be leveraged to bring added value to the business or fisher while simultaneously benefiting the environment. Conclusion Making Sense of Wild Seafood Supply Chains 37

Expectations management: Under-promise, over-deliver Trust and respect are hard-won with fishers and other actors within the seafood supply chain. Many NGOs recognize that truth, and have spent years building relationships in order to work with communities, government officials, and the industry in a productive way. As new innovations—such as technologies, designed interventions, or partnerships—are introduced, it is critical to set realistic expectations from the start. In recovering fisheries, there is a strong desire for immediate results. As noted previously, however, solving for sustainable fisheries management requires addressing multiple challenges at once. Making clear that each innovation, each project, is not in itself the answer, but rather is a part of a multipronged strategy, provides the type of transparency that builds trust. Being deliberate in what is conveyed and constant in managing expectations is critical. That said, any initiative that can show some short-term benefits and gains is always helpful (see Emerging Strategies for Progress, page 33).

Appeal to reputational risks and competitive Making clear advantage that each Some companies, such as McDonald’s, have engaged in more sustainable innovation, sourcing in order to stabilize supply, while others such as Walmart have each project, corporate social responsibility (CSR) commitments. In general, however, is not in itself mid-chain players may not necessarily see how their corporate values align the answer, with better data capture, sounder management regimes, or more sustain- but rather is able practices. If that is the case, it may be effective to engage on the level of a part of a competitive advantage and reputational risk. New seafood import policies in multipronged the EU and forthcoming in the , for example, require far more strategy, rigorous documentation that product is from a legal and managed fishery. provides Thus, the extent to which seafood companies need to prove that they are the type of operating legally and are not supporting IUU could serve as an effective on- transparency ramp for eventually convincing those companies to support better fisheries that builds management and data collection. At the same time, proof of compliance with environmental and social regulations (including supply chains free of trust. human labor violations) can serve as competitive advantages for mid-chain players vying for preferred purchasing agreements with major buyers whose reputations are at risk from public scrutiny. Guide for Understanding Where to Intervene The following table (Table 2: Evaluating supply chains for effective engage- ment, page 38-39) can serve as a guide for practitioners interested in explor- ing supply chain engagement as part of a fisheries improvement initiative. While there is no recipe for absolute success, understanding which strate- gies are working to overcome particular barriers can help to steer practi- tioners toward more informed and more effective interventions. A healthy dose of creativity is always advised, but having a framework within which to innovate is essential. The following table can provide the context to get you started. 38 Making Sense of Wild Seafood Supply Chains Conclusion

Table 2: Evaluating supply chains for effective engagement

Case Studies Timor deepwater Considerations Mexican lobster snapper Indonesian tuna Vietnamese BSC Fishery stakeholders’ Strong among fishers Strong among vessel Strong among processors Strong among end desire to address owners and processors buyers resource or data management problem Values or incentives Potential for better prices Gaining insight into Potential for better prices Desire for stable long- used to motivate (has not materialized) behaviors of fishers; and access to premium term supply; pressure stakeholders improved efficiency and markets through Fair Trade from NGOs to source accuracy within processing certification and traceability from sustainable facility fisheries

Regulations and MSC standard; Limited Regulations exist, but are Regulations exist, but enforcement self-enforced minimally enforced are not enforced

Attribute 1: Type of Differentiated product flows Mixed Differentiated Commodity product (commodity vs. into a commodity market differentiated)

Attribute 2: Brand MSC None Fair Trade; ThisFish FIP presence

Attribute 3: Relationship Tense Close ties Close ties N/A dynamics

Attribute 4: Supply chain Dispersed Vertically integrated (few Dispersed Dispersed consolidation (vertically players) integrated vs. dispersed)

Attribute 5: Market Bottleneck Moderately open access N/A Moderately open access access (bottleneck vs. open access)

End market Local and export Local and export Export with limited local Export

Are there known but Yes: MSC chain of custody No Yes: US/EU premium No untapped market market channels?

Obstacles to accessing Buyers block access to MSC No Lack of end-to-end supply new market channels chain of custody; chain traceability to lack of product distinguish product differentiation

Where innovation is Producer: Organized Processor: Introducing Dockside: Enumerator Producer: Current FIP happening co-ops to locally manage traceability and sharing program to capture catch under way but facing marine environment catch data to inform better data; traceability systems challenges fisheries management; into first processors; Fair smartphone technology in Trade tuna certification exchange for fisheries data happening in some regions

Strategy for progress Team up; potential: brand Prove concept; ID who Align with values; ID who Let fishers and industry local product holds power holds power lead Conclusion Making Sense of Wild Seafood Supply Chains 39

Case Studies (Cntd.)

Considerations Bahamian conch Kenyan multi-spp Peruvian multi-spp Fishery stakeholders’ Weak Moderate among BMUs Strong among fishers desire to address resource or data management problem Values or incentives None currently identified Potential for access to Desire for long-term used to motivate higher-end market and stability of fishery; stakeholders better prices potential to sell into higher-end market channels

Regulations and Regulations exist, but Moderate enforcement by Self-regulated, enforcement limited enforcement of BMU self-enforced rules regarding size

Attribute 1: Type of Commodity Mixed Mixed product (commodity vs. differentiated)

Attribute 2: Brand None None Co-op presence

Attribute 3: Relationship Close ties Close ties Close ties dynamics

Attribute 4: Supply chain Vertically integrated (few Dispersed Dispersed consolidation (vertically players) integrated vs. dispersed)

Attribute 5: Market Open access Bottleneck Moderately open access access (bottleneck vs. open access)

End market Mostly local Mixed Regional and local, with some export

Are there known but No Yes: Nairobi Yes: Lima premium untapped market market channels?

Obstacles to accessing Lack of awareness; Uncertainty in new new market channels geographic and market’s ability to bear communication isolation cost of differentiation and to absorb the volumes landed; little capacity of fishers to commercialize fish

Where innovation is Exporter: Exporters Producer: TNC’s fish- Producer: TNC’s happening Association traceability to-market program for facilitation of sustainable system for lobster, as well branding and marketing, management program as education campaign, including improved initiated by fishing co-op could be leveraged for logistics for improved conch value Restaurants: Want to work with local seafood programs and are interested in sustainable/ responsible product

Strategy for progress Team up; prove concept Brand local product; align Align with existing values; with existing values; team brand local product up 40 Making Sense of Wild Seafood Supply Chains

Some Common Abbreviations

BMU Glossary beach management unit

Below is a list of terms and abbreviations commonly used in the sea- CITES food industry and in particular, supply chain management. The list here Convention on International Trade in reflects terms used in this primer as well as some additional terms that Endangered Species of Wild Fauna and are likely to be encountered when working with seafood supply chains. Flora

CPUE catch-per-unit effort

AGGREGATOR CSR Supply chain player, usually a middleman, who aggregates fish from mul- corporate social responsibility tiple producers or middlemen in order to obtain a volume large enough to sell to a large buyer or exporter. EEZ exclusive economic AUCTION zone (see below) Central location where seafood buyers purchase recently landed fresh fish through a bidding process. Typically, buyers pay auction houses for fish, ERP Enterprise Resource and fishers or middlemen are paid by auction houses, minus a fee kept by Planning the auction house for facilitating the sale. In addition to providing the auc- (see glossary) tion services, auction houses can supply ice, pallets, and hoists for vessel unloading. FAD fish aggregating BATCH TRACEABILITY device Ability to track information about a seafood product, such as catch location, FIP species name, catch date, processing location, and so on, from the point of fishery improvement origin through to the end user. “Batch” generically refers to a unit of mea- project surement, such as a single fish, a tote of fish, or a container of fish. IUU BROADLINE DISTRIBUTOR illegal, unreported, Very large distributor of food products and other supplies that serves and unregulated restaurant and foodservice establishments. Broadline distributors typically (see glossary) purchase products from hundreds, if not thousands, of suppliers and food MPA processing companies. BROKER Person who buys, sells, arranges, and negotiates the sale of seafood be- MSC tween and among producers, buyers, and sellers. Brokers sometimes have Marine Stewardship Council (see access to markets that others cannot access. Brokers often do not physically glossary) handle the seafood, but make arrangements for the sale and transportation of the seafood. See also Trader. STPP sodium BUYER tripolyphosphate Person working for a wholesaler, retailer, or restaurant who is responsible for purchasing seafood products that meet requirements for price, quality, and TURF consumer preference. Buyers maintain inventory and identify and establish Territorial Use Rights new, direct supplier relationships. Depending on the type of business and in Fisheries location, buyers may buy direct from fishers, processors, or wholesalers. Glossary Making Sense of Wild Seafood Supply Chains 41

CATCH CERTIFICATE Certificate required by the European Union (and some other countries) for all seafood imports. Information required includes name, ves- sel registration number, species, catch area, landing date, total weight, and importer/exporter information. Certificates must be validated by the country in which the fishing vessel is registered. Catch certificates are one way the EU is attempting to combat illegal, unregulated, and unreported (IUU) fish- ing, and to ensure traceability of fishery products.

CATCH ORIGIN Location where fish or shellfish are captured or harvested. This can be pre- cisely recorded by vessels equipped with global positioning systems (GPS), or may broadly refer to a fishing region within the jurisdiction of a state or country.

CHAIN OF CUSTODY Documentation showing transfer of ownership of seafood product every time the product changes ownership and/or is altered or repacked. The Marine Stewardship Council (MSC) requires that MSC-certified product pass through a certified chain of custody in order for the product to maintain its certification and bear the MSC label.

COLD CHAIN Supply chain that also serves to maintain products at or below a particular through refrigerated storage and transport.

COLD STORAGE Refrigerator or freezer warehouse that stores seafood product for later use by seafood processors or wholesalers. Commercial cold-storage operators charge a daily, weekly, or monthly fee for storage space and to ensure that proper are maintained.

COMMODITY High-volume product aggregated from many sources and for which all the individual units—be they whole fish, filets, or value-add products—are con- sidered identical, regardless of how, where, when, or by whom they were produced or harvested.

CONSUMER Person who ultimately buys (and presumably eats) a seafood product, and where the supply chain ends. The consumer typically purchases the product from a restaurant or retail location.

DEALER Person or business that participates in the sale and processing of seafood. In some countries, accurate dealer records of fish landings and sales data are required by the government or fishery managers. However, such accounting is not required by the dealers’ customers; thus, most catch-level information is lost after this point in the supply chain.

DISINTERMEDIATION Removing one or more of the intermediaries (middlemen) in a supply chain involved in moving product from producer to consumer. Although disinter- mediation can be an effective way for some producers to access the market and increase margins, doing so can be risky if they rely on the middleman for more than just moving product to market, or if the middleman is a close friend or family member. 42 Making Sense of Wild Seafood Supply Chains Glossary

DISTRIBUTOR Person or business selling seafood to restaurants or retailers. Distributors typically buy from processors, middlemen, or wholesalers.

DOCKWORKER Person employed to load or unload fishing vessels at the dock.

DOWNSTREAM Any successive stage of the seafood production process that involves processing, packaging, and sale of a finished product, which reaches the consumer. Downstream is the direction of the supply chain away from the producer and toward the consumer. For example, packaging is a down- stage from fish cutting and processing.

END BUYER Retail or restaurant business that sells seafood to the final consumer.

ENTERPRISE RESOURCE PLANNING (ERP) Business management software used internally to collect and monitor infor- mation related to seafood business processes, such as purchasing, process- ing, marketing, sales, accounting, and inventory management.

ENUMERATOR Person usually employed by the government or local NGO who meets boats at the dock to count, weigh, grade, and record landings for fishery manage- ment or tax purposes.

EXCLUSIVE ECONOMIC ZONE (EEZ) An area that extends no further than 200 nautical from a country’s coast within which the country has exclusive rights to use and harvest ocean resources, including fisheries.

EXPORTER Person or business shipping seafood out of the country in which it was landed or processed. Export usually occurs to wholesalers. Seafood infor- mation can be lost at this point, especially in cases where importing coun- tries do not require catch certificates. Language barriers can also result in lost information.

EX-VESSEL PRICE The price paid, usually per pound, by the first receiver after fish is landed.

FIRST RECEIVER Buyer (usually a processor or wholesaler) who purchases seafood directly from the producer. .

FISHERY-DEPENDENT DATA Data collected from fishing vessels and seafood dealers, which includes fish- ing locations, gear types, volume of landings, volume of , ex-vessel price, and fishing costs.

FISHERY-INDEPENDENT DATA Data collected by government or university scientists for stock-assessment purposes, typically using survey methods. As opposed to sampling where fish are most abundant (which is where fishers usually fish), these surveys take samples throughout a fish’s geographic range. Glossary Making Sense of Wild Seafood Supply Chains 43

FOODSERVICE Business or organization that prepares meals in large volumes. Foodservice includes independent restaurants, chain restaurants, universities, hotels, government and hospital cafeterias, and caterers.

FORWARD CONTRACT Agreement between a fisher and a buyer that commits the buyer to pur- chase the boat’s catch prior to the fisher returning to port. Sometimes the forward contract is made prior to the fisher leaving on a fishing trip, or as early as the start of the season. In cases where the contract is between a fisher and an end buyer (retail or restaurant), the processors and distributors work on a fee-for-service basis and do not take ownership of the product.

FRAGMENTATION Having different components of seafood processing located in different locations or being performed by different companies. Fragmentation makes maintaining accurate information flow between and among companies difficult.

FUNGIBLE Good or product that is mutually interchangeable and able to replace or be replaced by an identical item. Commodity products are by definition fungible.

GRADING Process of separating product based on a particular feature, such as size or quality, in order to send higher-value products into more premium markets.

HORIZONTAL CONCENTRATION Occurs when a few firms dominate a particular node in the supply chain and can control the flow and pricing of product. In artisanal fisheries, this often is seen as a single middleman aggregating catch from multiple fishers.

ILLEGAL, UNREPORTED, AND UNREGULATED (IUU) Illegal fishing activities are those being conducted without permission or in violation of formal laws and regulations. Unreported fishing occurs when landings are not reported to the government or fishery management au- thority. Unregulated fishing is the harvesting of fish and shellfish stocks for which there are no conservation or management measures in place.

IMPORTER Person or business bringing in seafood from another country for the pur- pose of resale, usually to a wholesaler.

INTERMEDIARY (see Middleman)

INVENTORY Physical amount of seafood product on hand and available for sale.

LANDING LOCATION Location where fish or shellfish are off-loaded from a vessel. Seafood labels often incorrectly list the landing location as the catch origin, which misleads consumers, masks IUU, and enables seafood fraud. 44 Making Sense of Wild Seafood Supply Chains Glossary

LOGISTICS Management process that coordinates the movement of seafood within pro- cessing or storage facilities, and among sellers and buyers in a supply chain.

MARINE STEWARDSHIP COUNCIL (MSC) An independent nonprofit organization that sets standards for sustainable fishing. Fisheries that meet those standards can become MSC-certified. Product originating in a certified fishery is eligible to carry the MSC label as long as it moves through a supply chain that has been chain-of-custody certified by the MSC. If even one supply chain actor is not MSC chain-of-cus- tody certified, the chain of custody is considered “broken,” and the product loses its certification documentation and cannot carry the MSC label.

MASS BALANCE Accounting method typically used by auditors within certification bodies that ensures the total weight sold for a product does not exceed the total weight purchased. Mass balance does not require the physical separation of certified products, and thus is not sufficient for policing product mislabeling.

MIDDLEMAN Person or business that purchases seafood at one node in the supply chain and sells to the next node. A chain of middlemen may serve to aggregate product from producers operating in remote areas, and in some cases, the middleman is a family friend or relative. It is not uncommon for the middle- man to provide financial assistance for fishing operations or personal needs. Also called Intermediary.

ONE-UP, ONE-DOWN Record keeping to track purchases (one up) and sales (one down) of all seafood products that move through a particular node in the supply chain. This process is required by some countries for product recall purposes, and is a form of traceability.

PRIMARY PROCESSOR Person or business that performs the first steps in seafood processing, including heading, gutting, scaling, and deboning finfish, shucking shellfish, and holding in live tanks.

PRODUCER Fisher or aquaculture facility that harvests fish or shellfish.

QR CODE Printed code that is readable by a smartphone camera and displays a specific webpage. QR codes on seafood labels are usually associated with information and photos about the seafood brand, fishery, fishers, or other information that tells the story of the fish.

RETAILER Person or business that sells seafood to the consumer, as opposed to another business or wholesaler. Retailers are not required to label seafood with information about dates or origins, especially if it has been processed. Glossary Making Sense of Wild Seafood Supply Chains 45

SECONDARY PROCESSOR Person or business that receives seafood from a primary processor (or other secondary processor) in order to further process the seafood before sale. Secondary processing could involve filleting, portioning, cooking, canning, smoking, adding other ingredients, or merely thawing and refreezing and then repackaging.

SHRINK 1. Loss in weight of seafood due to dehydration; 2. Revenue loss from sea- food that has not sold or has spoiled and must be discarded.

SOAKING Process of submerging seafood in a water bath or a mixture of water and preservative to increase or retain moisture, or extend shelf life. The preser- vative often used is sodium tripolyphosphate (STPP). Soaking can increase the weight of a product, and is one form of seafood fraud. This process is common for .

SPECIALTY DISTRIBUTOR Person or business specializing in the sale of seafood items that command a premium price based on quality.

STORIED FISH Seafood sold with accurate information about its journey from water to plate, including where, when, and how it was caught, who caught it, and any compelling facts about the people or communities involved in the fishery.

SUPPLIER Person or business buying seafood from producers or wholesaler with intent to sell to restaurants or retailers who serve consumers.

SUPPLY CHAIN People and businesses involved with the production, processing, brokering, and distribution of seafood from fisher to consumer. Seafood maybe trans- formed multiple times along the supply chain as it changes hands from one member of the supply chain to another.

THIRD-PARTY CERTIFIER Independent party or organization specializing in the certification of fisher- ies, production process, or businesses using an established standard, such as the Marine Stewardship Council.

TRACEABILITY Ability to track information about the origin and journey of seafood prod- ucts as they are transformed through successive steps in a supply chain. Traceability requires that the people and businesses in the supply chain have (a) internal systems to capture, manage, and share traceability data; (b) mechanisms for physically linking products and data (such as with tags or barcodes); (c) supply chain transparency, and (d) the ability to verify that data are accurate and remain intact from origin to consumer.

TRADER Person or business specializing in connecting seafood buyers and sellers by offering competitive pricing. Traders make profits from a percentage of sales, and sometimes promote sellers. See also Broker. 46 Making Sense of Wild Seafood Supply Chains Glossary

TRANSPARENCY Degree to which information about products, product sourcing, and com- panies within a supply chain is knowable by other members of the supply chain and by consumers.

TRANSPORTER Person or business responsible for moving seafood from one point in the supply chain to another. Often a third party for hire that specializes in sea- food and other cold transport.

UPSTREAM Any stage of the seafood production process that occurs prior to another supply chain process. Primary processors are upstream from wholesalers.

VALUE-ADDED Amount by which the value of a seafood product is increased at a certain node in the supply chain by way of certain production methods (e.g., fish- ing, handling, processing), added ingredients, packaging, or branding. Also Added Value.

VERIFIABILITY Ability to validate and confirm information about seafood origins and other characteristics that may be on a label or otherwise associated with a product.

VERTICAL INTEGRATION Consolidation of multiple steps of the supply chain into a single company. In seafood, a vertically integrated company may own seafood vessels as well as processing facilities. While vertical integration allows for more seamless and accurate information transfer among processes and to downstream supply chain members, it can also enable seafood fraud and price fixing if a single business controls the majority of a supply chain.

WHOLESALER Person or business that purchases seafood for the purpose of resale to an- other business in the supply chain. Risk of seafood fraud is high at this level, as spoilage, waste, and shrink can drive dishonest practices. Making Sense of Wild Seafood Supply Chains 47 www.FutureofFish.org